The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
An imminent big-milestone birthday has the Brilliant Investment Group (BIG) executive chair thinking about what he’d like to see this year.
Partnerships beat mass market solutions for real asset fund provider Alceon
After offering a fund giving investors access to diversified listed and unlisted real assets across Australia and New Zealand for over a decade now, multi-strategy alternative investment manager Alceon has a fairly authoritative view on what it takes to build a real asset portfolio with both resilience and growth potential.
According to Alceon executive director and head of real estate funds management Grant Atchison (pictured, left), what makes a fund like the group’s Alceon Australia Property Fund thrive are the partnerships behind it. Partnerships provide the capital that affords the kind of sale required to own assets outright. But, provided they’re with the right entities, they also provide expertise.
Atchison uses the example of large financial advice licensee Findex, which has about 140 financial advisers under its umbrella and linked up with Alceon on the property fund in its early formation days as a foundation partner.
“When it comes to partnerships versus mass market, a key thematic is the importance of those relationships,” Atchison said at The Inside Network’s recent Investment Leaders Forum in Byron Bay, where he spoke about the genesis of the fund on stage with Findex head of research Matt Waugh (pictured, right).
“Matt and I worked very closely together, and we do that because that’s how you manage this type of portfolio,” Atchison said, adding that going to the mass market for capital was not a viable option. When markets get volatile, you need a partner you can trust to stay the course. “Mass market solutions… that’s the GFC all over again, when everyone heads for the exit at the same time.”
That fund preservation driver also applies for investors. Not only do they want a return that aligns with portfolio goals, but they want to know the fund is robust enough and has the kind of well managed, independent governance that will keep a close-knit clutch of capital providers comfortable.
“We were trying to get significant drawdown protection and capital preservation,” recalls Findex’s Waugh on teaming up with Alceon. “Since 2015, when Alceon’s fund was in its newest form, it’s run at a number just over 8 per cent net… and we’re really happy with that.”
Part of maintaining the mutually beneficial relationship, Waugh explains, is being upfront about redemptions. While there is no “contractual arrangement”, there remains what he says is an “open relationship” between the two partners.
“If we know that there’s going to be a reweighting in the portfolios, and it might be, you know, $30 to $40 million, we get on the front foot and give Grant plenty of notice,” he said.
The Alceon Australian Property Fund has a hybrid portfolio of listed and unlisted property and infrastructure against a benchmark made up of half A-REITs and listed infrastructure and half unlisted property and infrastructure.
The unlisted side of the portfolio contains institutional-grade assets with a portfolio of internally and externally managed funds with an overall target allocation of 70 per cent ‘core’, 20 per cent ‘value add’ and 10 per cent ‘development’.
